A collection of positive and negative news that affects the foreign exchange market

In the foreign exchange market, various news always influences the trend of the currency. For foreign exchange trading on March 27, many positive and negative news are worthy of close attention from investors.

Impact at the economic data level

(I) US economic data

As the world's largest economy, the US economic data has far-reaching impact on the US dollar and foreign exchange markets. Recently, the performance of US soft data is still weak, and consumer confidence has declined sharply, but the service industry PMI is stronger than expected, showing the relative resilience of the service industry in the economic structure. On March 27, we need to pay attention to the monthly rate of durable goods orders in the United States in February. This data can intuitively reflect the prosperity of the US manufacturing industry. If the data is strong, it means strong demand in manufacturing, which may drive the appreciation of the US dollar and put pressure on other currencies; on the contrary, poor data may suppress the US dollar and bring opportunities for rising non-US currencies. In addition, subsequent US economic data such as GDP growth rate and inflation rate will continue to affect market expectations of the US dollar trend, and in turn affect the foreign exchange market structure.

(II) Economic data of other countries

European economic growth is facing challenges. Although GDP unexpectedly increased by 0.1% month-on-month at the end of 2024, the core member states Germany and France have contracted, and employment growth in the fourth quarter was only 0.1% month-on-month, lower than the previous quarter. If the subsequent economic data of the euro zone cannot be significantly improved, such as the industrial production index and consumer confidence index, it will weaken the avatradescn.competitiveness of the euro in the foreign exchange market and suppress the euro exchange rate. In Japan, the initial value of the service industry PMI in March fell to 49.5, and the initial value of the manufacturing industry PMI was 48.3. The economic data weakened. If subsequent inflation data and retail data areWaiting is not ideal, and the yen exchange rate may be under pressure. The UK has lacked major economic data release recently, but the market's adjustment to the Bank of England's interest rate cut expectations affects the trend of the pound. Subsequent economic data such as employment data and GDP data will become the focus of market attention and affects the performance of the pound in the foreign exchange market.

The central bank's monetary policy orientation

(I) Federal Reserve's monetary policy

The direction of the Federal Reserve's monetary policy has always been a key influencing factor in the foreign exchange market. The market has differences on the Fed's expectations for future interest rate adjustments. If the Fed releases a hawkish signal, implying that interest rate hikes or delays interest rate cuts, it will attract funds to flow into the US dollar, push the US dollar to appreciate, and the non-US currency will depreciate; on the contrary, if the Fed shows a dovish attitude and accelerates the rate cut process, the US dollar will face downward pressure, providing room for non-US currency to rise. The Federal Reserve has recently lowered its economic growth expectations, and its subsequent policy meetings and official speeches will become the focus of the market to judge the latest assessment of the Federal Reserve's economic situation and policy adjustment direction.

(II) Monetary policies of other central banks

The European Central Bank is expected to continue its easing policy, and the market generally expects that interest rate cuts by 25 basis points again next month. Continuous easing will increase the euro zone's money supply, reduce the euro's return on assets, weaken the euro's attractiveness in the international currency market, and lead to a downward trend in the euro's exchange rate. The Bank of Japan has been avatradescn.committed to "normalizing" the economy and has steadily recovered positive interest rates, and most economists expect at least one interest rate hike this year. If the Bank of Japan subsequent interest rate hikes will attract international capital inflows and drive the appreciation of the yen; if the deterioration of economic data slows down the pace of interest rate hikes, the appreciation of the yen will be limited. On the Bank of England, traders' bet on the Bank of England's interest rate cut in May dropped from 70% to 60%. Subsequent Bank of England's monetary policy decisions will be based on domestic economic data, and its policy adjustments will directly affect the pound exchange rate.

Impact of geopolitical and trade situation

(I) Geopolitical situation

Geopolitical tensions have a significant impact on the foreign exchange market. The United States and Russia continued to engage in negotiations, but did not reach a joint statement, and the diplomatic process was not going well. The U.S. government has cracked down on Houthi armed forces and strengthened sanctions on Iran and Venezuela, and Israel has launched a new military operation. These geopolitical conflicts have caused market risk aversion to fluctuations. When risk aversion is warming, investors tend to buy safe-haven currencies such as the US dollar and the Japanese yen to promote their appreciation; if geopolitical tensions ease and risk appetite rebounds, high-risk currencies in non-US currencies may be favored, such as the Australian dollar, New York dollar, etc.

(II) Trade situation

The uncertainty of the trade situation has an important impact on the currency exchange rates of various countries. Media reports said that Trump's April 2 tariffs may be milder than expected, which has stabilized market sentiment to a certain extent. But global trade protectionism is on the rise, the intensification of international trade tensions still pose a threat to the global economy and foreign exchange markets. If trade frictions escalate further, the currencies of countries that rely on exports may depreciate, such as South Korea, Germany, etc.; while the currencies of countries with large trade surpluses are relatively supportive. In addition, adjustments to trade policies of various countries, such as tariff changes and the signing of trade agreements, will directly affect the supply and demand relationship of currencies of relevant countries in the foreign exchange market, and thus affect the exchange rate trend.

In summary, on March 27, 2025, the foreign exchange market was affected by the interweaving of economic data, central bank policies, geopolitics and trade situations, and the trend of each currency pair was full of uncertainty. Investors need to pay close attention to various news trends, avatradescn.comprehensively analyze the market situation, and make investment decisions cautiously to cope with avatradescn.complex changes in the foreign exchange market.

The above content is all about "[Aihua Foreign Exchange Decision Analysis]: Collection of Positive and Negative News that Influences the Foreign Exchange Market". It was carefully avatradescn.compiled and edited by Aihua Avatrade Foreign Exchange Editor. I hope it will be helpful to your trading! Thanks for the support!

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